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Why United Rental’s Shares Jumped

Is this meaningful or just another movement?

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of United Rentals(NYSE:URI) jumped 15% in trading today after the company announced a strong earnings report.

So what: After the market closed yesterday, United Rentals said it earned $1.35 per share on $1.22 billion in revenue in the third quarter. The revenue number was slightly below the $1.27 billion analysts expected, but earnings crushed the consensus estimate of $1.08 per share.

Now what: Results are up, improving along with the construction segment, and customers are choosing to rent rather than buy in case the economy falters again. This is good news for United Rentals, and with the acquisition of RSC Holdings now complete the company has a broader customer base.

There is some caution in the report however. Investors should keep an eye on utilization and free cash flow estimates for 2012. With that said, the strong earnings beat and a forward P/E of 8.4 is enough for me to think the stock still has plenty of room to move higher.

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